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sorry, extra-dim tonight and not quite following ... yes, the ML account shows a loss of 3.9% with everything reinvested, every month buying b/w 1 and 44 shares
For Cost Basis, M* has both the IRS Method (default) and Adjusted-Method/Original-Cost Method. Charts are point-to-point with reinvestments - you may have also done some buys/sells along the way. The IRS Method is to avoid double-taxation (and so do brokerages) but that isn't what investors typically look at. https://portfolio.morningstar.com/RtPort/free/pm_NewFeatures.html#costbasis
i ran into this problem schwab and it was as yogi said. only way to get the returns to show the adjusted method was to fill out paperwork for my various accounts, which i have yet to do. what a pain.
Brokerages use the IRS Method, so the info is also useful for tax-loss harvesting (TLH). When they also provide account return info, they do it in the way investors would calculate TR. I don't see why one would bother going through extra steps @linter mentioned to mess with the brokerage set up.
As an example, suppose you bought a fund for $100, it paid $5 in distribution that you reinvested, and its price after 12 months was $102.
The IRS Method would add $5 distribution to your cost basis (because you will be paying tax on that), so your new cost basis is $105 and your potential loss on sale would be 102/105 = 0.9714, or -2.86%. This is NOT your total-return (TR) but indicates your potential tax-loss.
But as an investor, your potential gain on sale would be 102/100 = 1.02, or +2%. That's more like your TR.
As mentioned previously, M* has a setting for both ways, while brokerages use the IRS Method by default.
@david: Simple point I didn't manage to make late last night: the reinvestments add to your cost basis, therefore the capital gain showing will drop/capital loss increase. Like Yogi says, all that sets up a good tax loss opportunity if you need/want one.
yogi: i'm with you now. thanks for the enlightenment. the only reason i thought about changing things is the shock i got when i first saw a big negative number at Schwab when M* was showing a positive one.
This is a really important PK article. It more or less is telling us that if the new regime won’t tell citizens about disease trends it might not tell us about inflation either. We will still see our income buy less but lots of investors will be fooled if inflation is a key signal. David,,,, as far as your asset allocation,,,, if you don’t have the need to take risk and you don’t have FOMO,,, congratulations. Thanks for the PK link.
Comments
The IRS Method is to avoid double-taxation (and so do brokerages) but that isn't what investors typically look at.
https://portfolio.morningstar.com/RtPort/free/pm_NewFeatures.html#costbasis
As an example, suppose you bought a fund for $100, it paid $5 in distribution that you reinvested, and its price after 12 months was $102.
The IRS Method would add $5 distribution to your cost basis (because you will be paying tax on that), so your new cost basis is $105 and your potential loss on sale would be 102/105 = 0.9714, or -2.86%. This is NOT your total-return (TR) but indicates your potential tax-loss.
But as an investor, your potential gain on sale would be 102/100 = 1.02, or +2%. That's more like your TR.
As mentioned previously, M* has a setting for both ways, while brokerages use the IRS Method by default.
The only thing I could think of was that I skipped a reinv cycle the first month.
In any case I sold out of the position today, per:
https://paulkrugman.substack.com/p/lies-damned-lies-and-trumpflation
So now our entire egg except for some cursed CCOR is in Fido >4% mm funds. A first, and greed keeps calling even as PEs remain psycho high.